There was another month on month increase in consumer confidence, according to the latest Lloyds Bank Spending Power Report.
Following last month’s improvement and record high of 160, the Overall Index has increased to reach a new all time high of 164. This has been driven by an improvement to the Current Situation Index and a marginal improvement to the Future Situation Index.
The upward trend continues, driven by an increase in sentiment towards people’s personal financial situation (up five percentage points (pp) to a high of +31%), household financial situation (up 2pp to +22%) and an increase in the proportion with disposable income (up 2pp to 80%).
Lloyds Banking Group economic data shows that June saw a further fall in year on year essential spending of -1.2% overall, with the spending reductions being boosted this month by falls in water bills (-1.3%).
After three consecutive months of a falling Future Situation Index, June saw a small increase of two points, with more people now expecting to be able to save more, and have more discretionary income in six months’ time.
Claire Garrod, head of personal current accounts at Lloyds Bank, said: “Spending power confidence continues to increase with people spending less on essential bills in June, and having more discretionary income. However, the degrees of confidence are very different for different consumers. Empty nesters are feeling more positive about their personal finances than younger generations, who have greater concerns about the employment market and saving for the future.”
Empty nesters feel significantly more positive towards their personal financial situation than their younger counterparts. 70% say it is good, compared to 61% of those with families and 58% of young singles. 63% of Britain’s young singles think the country’s employment situation is not good, compared to 49% of those with families and 51% of empty nesters.
People are inclined to spend any spare money they may have, regardless of life stage. However, empty nesters are most likely to save any money left at the end of the month, with 33% doing so.
Young singles are the most hopeful group about saving for the future with 31% expecting to be able to save at least somewhat more in six month’s time than they do now. Women are more positive than men with regards to sentiment toward future saving. 23% of women expect to save more than they do now, compared to 19% of men.
On average, just under one in five people (19%) think that they will have more money in six months’ time. However this varies greatly between the different consumer types, with 32% of young singles saying they will have much or somewhat more money in six months’ time, compared to 24% of families with kids and 11% of empty nesters.
Older people with debt are less hopeful that they will be able to pay off more of it in the future than their younger counterparts.18% of those aged 18-44 with debt expect to pay off much more or somewhat more in six month’s time compared to just 10% of those aged between 45-75. Some families may expect the load to lighten in the future with just 16% of families with debt saying they expect to be paying less in servicing it in six months’ time.
Patrick Foley, chief economist at Lloyds Bank, said: “Consumers remain in good spirits, with sentiment buoyed by a combination of strengthening wage growth and muted price pressures. And with uncertainty in the international environment ebbing a little, the economic backdrop looks conducive to a pickup in the pace of the UK’s recovery through the second half of the year.”